Have you heard of Xiaomi yet? If you haven’t, you probably will pretty soon. If you have, you know the Beijing-based company has come out of nowhere this year to become the biggest threat to Apple, Samsung and other smartphone makers.

That’s because Xiaomi designs its phones with high-end specs and sells them at midrange prices. Xiaomi phones can’t touch the iPhone or the Galaxy in terms of quality (yet), but the company beats them handily on price, the paramount factor for many consumers in China. Xiaomi’s popular Mi3 handset — including a Nvidia Tegra 4 chip, a 13-megapixel Sony camera and 2-gigabit RAM — sells for $327. In comparison, in China, Apple’s iPhone 5S retails for $866 without a service plan, while the Samsung’s 32GB Galaxy Note 3 retails for $884.

Founded in 2010, Xiaomi started shipping products a year later. The company’s name comes from the Chinese word for millet (and may or may not reference a communist slogan), and its founders have backgrounds at Google, Microsoft and Kingsoft, an early Chinese software company.

The company’s private valuation is already estimated to have surpassed $10 billion — double the valuation of BlackBerry and half that of Sony. Xiaomi sold 7 million handsets last year and just as many in the first half of this year, putting it on track to sell 20 million in all of 2013. (Apple, by contrast, sold 125 million phones last year.) Very few startups can claim to have reached such milestones so quickly.

Outside of China, Xiaomi began to gain notice in July, when research firm Canalys said that the company’s market share in China surpassed Apple for the first time in the second quarter. Apple’s share fell from 8% to 5% in a single quarter. Around that time, Xiaomi unveiled its Hongmi, or Red Rice, phone for around $130 and offered 100,000 handsets for sale online. It sold out in 90 seconds. This month, Xiaomi moved past Taiwan’s HTC to become the fifth largest smartphone company in China.

The company made even bigger waves in late August, when it hired Hugo Barra from Google. Barra, who was head of product development at Google’s Android unit, was impressed with how the company forked Android to its handsets. At Xiaomi, he will oversee the company’s overseas expansion.

Beyond selling high-end phones at low cost, other factors are driving Xiaomi’s success. It helps that the company has a contract with China Mobile, the country’s state-owned telecom giant. China has 745 million customers (465 million smartphones and growing), promoting its 3G network. Samsung also has deal with China Mobile, while Apple doesn’t — although there are signs that that may change soon.

Xiaomi’s executives like to stress how the company is focused on user experience, but in a way that is different from Apple. Apple famously anticipates what will work with users and limits their ability to customize the product. Xiaomi updates its Android software every Friday after urging engineers to talk with customers to solicit feedback, CEO Lei Jun said at a conference this year.

Another divergence from Apple’s strategy: while the Cupertino, Calif., giant ran iTunes for years at little or no profit — using its music, movies and apps as a way to sell higher-margin devices — Xiaomi’s approach is similar to Amazon. Amazon sells its Kindle devices at or below cost to expand market share, using apps and content revenue to shore up slim margins.

Xiaomi also kept costs low by selling its phones online. That may be changing as it sells more phones through stores, including its own retail shops. The company is evolving quickly in other ways. Barra’s hiring suggests the company will be moving into new markets soon, starting with Taiwan and Hong Kong and moving on to Europe. It’s also already produced its first smart TV— a 47-in., 3-D screen retailing for around $490. It is reportedly working on its own smart watch.

Such ambitious growth may present Xiaomi with new challenges. It’s not clear whether it can maintain its intensive focus on customer experience as it moves into new markets, each with its own peculiar needs. Or whether it can grow quickly in them without the kind of support it receives from China Mobile. Or, most importantly, whether it can grow into new countries and new product categories with its small margins.

On the other hand, Xiaomi has a huge opportunity in other developing countries. According to ABI Research, low-cost smartphone shipments will rise to 758 million units in 2018, from 238 million this year. And Xiaomi’s phones have already proved popular by offering more bang for the buck.

The rise of Xiaomi has left some securities analysts wondering about how Apple will respond to a company thriving by using strategies very different from its own. In a research note, Sanford C. Bernstein analyst Mark Newman called Xiaomi a “new disruptive force” that “particularly stands out to us as a potential game-changer.”

Meanwhile, UBS analyst Steve Milunovich wrote that “it would be a bit surprising if Apple were easily disrupted.” But he also noted, “It’s possible that Apple is becoming the Digital Equipment of phones, delivering improved technology for its best customers but ignoring the growth below because the company does not want to ‘compromise the user experience.’”

For its part, Xiaomi sounds a little more confident — if not outright cocky — about its prospects against Apple. “They [Apple] don’t really care about what the users want,” Lei said in a recent interview. “They imagine what the users want.”

its kinda funny and its kinda sad that even an article about a chinese cellphone is getting all this politicaly charged bs from readers. but how is this any surprise? the culture of the west is to be butt hurt over the "them" getting one over on "us." what's probably the funniest part is that all the naysayers have probably never even tried touching the phone and probably believe HTC isn't a chinese company either. It's a Taiwan company btw. I respect guys like Tyrlol who actually touched the phone and gave his opinion than most of the people here thinking a cellphone can enlist into a political party.

I guess it really is time to say face facts. China is leaps and bounds ahead now. accept it or get left behind.

There is an saying that before you take a plank out of someone's out remove the spec out of your own then you better able to see the plank. Is America truly a beacon of right dealing in business in the past and now in its future. Is America a country that I can look at morally in its past and also in its future. Its so easy to forget that America was acounrty that oppressed its own citizens based only colour and that was not that long ago. Now I don't claim that China is perfect from it I am against anything that squashes free press and the ability to have freedom of choice. But can America hold up its hands a truly say this has never happened in its nation. By the way I am not Chinese and I am not from America.

This comment thread gives you a small glimpse into what the Chinese are like. They are very sly and persistent, which is why they will succeed in getting the world to believe their B.S. propaganda of friendship and peace if we're not careful.

The only people who deny China's moral depravity are those who've never been to China or the Chinese themselves (would you believe a convicted thief's own denial?).

Some extremist Chinese have commented here that every country has problems and corruption. That's not the point. The point is that China is the absolute worst and filthiest. China's corruption and moral bankruptcy is almost 2nd to none in the world.

Reading some of the comments from the Chinese here, you can tell they're extremists even though they pretend to sound reasoned.

Aggressive statements like "The dignity of the Chinese people will not be stopped by you or anyone else" and comments written in Chinese that urge their fellow comrades to hide their true hatred against the U.S. prove beyond a doubt that the Chinese are hostile.

I've only had a hand on with the Xiaomi 2s, and the build quality FAR surpasses samsung. Although iOS is terrible, one must appreciate the build quality of an apple phone. We will have to see when the international version of the Mi3 starts selling. Using the 2s as a base judge of quality craftsmanship, it's looking like the Mi3 will be quite possibly the best phone of the year hands down. Also, the MIUI android rom they use is simply TOPS. On any other android I'd likely be going with a custom rom, but I honestly don't think it would be worth it to change the rom on a xiaomi device. They also release a new build every week to keep users updated.

whhaaa? how can you say that xiaomi is some possible communist slogan while recognizing their new model hongmi? I mean I guess if by communist you mean cheap and effective...

but also, xiaomi threatens apple and samsung just like baidu threatens google.... which is to say, not at all. You yourself admit that they are only getting by on slim margins and sells the phones at a loss. Rather than threaten anyone, I think their expansion into other countries is indicative of them saving their own butt as they may need to sell more expensive phones just to stay afloat.

They did not come out of nowhere. They came out of where Apple outsourced all the production. Did you not think before long these people would make product for themselves. Innovation in smart phones is just about over, design is not much of an issue. All that Apple has left is small advantage in branding, and zero in manufacturing ability. As for brands, look how fast Nokia and RIM cratered.

China has not proven to be very supportive to foreign companies when its own industries are threatened. All those tax breaks we gave the wealthy that they invested in China are going to come to tears someday...

@ThinkOfOurKids Oh please. A country that is merely competing with us economically is the same as terrorists that killed 3,000 Americans? Under what moral compass does that make even the smallest bit of sense? None.

China doesn't want America to fail... if America failed where would China be? It would lose a trading partner, it would lose all of the bonds and assets that it bought, it would lose the protector of the world economic system that China is now a part of.

So China is competing with the US economically. Big deal. So is Germany, Japan, every other country in the world. The only difference is that China is a bigger country, so it'll be a big challenge. But what is competition if only one side is allowed to compete?

So China copies US technology... again, so does every other country. By the way, gunpowder and guns were invented to China. The US has been copying that technology for hundreds of years. Maybe we can make the Chinese an offer: We'll give up our guns if they give up their smartphones.

We need to stop advertising for a company that comes from a Communist
country whose state has a hand in everything that it can manipulate. A
state that will be most happy to see America destroyed because that
means China will dictate how the world runs.

Would we be promoting products made from terrorist nations that
want America to fail? So what's the difference with China? We're just
falling for China's deception of looking like a capitalist nation that
pretends to play by international rules, but is really plotting against
and manipulating the world behind our backs.

China is no different
from the terrorists who attacked us in New York, except the Chinese are far
cleverer than resorting to physical violence. The Chinese are stealthily
attacking us with propaganda without people even knowing it. Any
American who defends China's offensive has already fallen into this
trap.

This company's product is a complete iOS copy and cheap
Chinese junk. No different from how the rest of China's companies have
gotten to where they are today: copying and stealing the world's
technologies.

@HazeAndDrizzle nokia is part of microsoft and RIM cratered because they came out with products less half finished than any other company.... Last time I was interested in them was the storm but then I found out that the touch feedback means the whole screen depresses in a faux responsiveness manner and then it only got worse from there.

@WilliamDonelson Every countries are protecting their own people and industry. That's why the country foundation and it's duty. Open the market is also limited.

Smartphoe is a popular and not a high-technology product. Iphoe still sale at a high-price to get a high profit. Now there is a cheaper one come out. Survial of the fittest is a rule. Iphone should research more high-technoloty product to grap their customer. Branding will be run out in one day if no eye catching product.

Think again. China does not copy American technology. America does not have that technology. America cannot produce a smart phone. America cannot produce an LCD display. America cannot build a laptop. The American economic elite gave that all away to China for their own gain and the loss to the rest of American society. And America cannot get it back easily if at all. All that manufacturing requires intense, interconnected infrastructure that does not exist here and is not practical to re-establish here, if it ever existed for the new stuff.

If you buy the suckers line that America "designs", don't believe it. Design engineering cannot stay long separated from manufacturing engineering. Notice that smart phones have leveled off, and there is precious littler new serious design. The design component is not especially American or need be in America. No my friends what America has is sales outlets and retail distribution, Walmart never made a thing in its life either. And this is why the country is spinning downwards with very little contributed to the value chain. It why the only deficit that counts is so frightening, the deficit in the balance of trade.

Nice
straw man argument. Nobody said they were morally the same. What is
true, though, is that both categories of people ARE immoral. And when
you have a foreign threat against our lifestyle from an immoral entity,
you don't promote or support them.

China may not have killed
Americans out right, but their evil nature is the same. The Chinese
don't care about human life, only money. They will cut corners to the
extreme such that lives are killed or endangered in order to make an
extra cent. China also aligns itself with terrorist or rogue nations.
That makes China our enemy even IF we need to deal with them
economically.

Of course China wants to destroy America, but
not in the way you are thinking. Portraying "destroying America" as
"being utterly incapacitated and ruined" is another straw man argument.

China
wants to destroy America in the sense that they want to replace America
as the sole super power. China's national media is constantly decrying
the American lifestyle (while at the same time indulging in it and
reaping the benefits of capitalism without playing by the rules).
Ultimately, China wants to usurp the dollar with its own currency. Don't be naive.

If
you read my other comments, I specifically mention there is no problem
with other proper countries that compete with the US, like Germany,
Canada, Korea, Japan, etc. The problem only arises with rogue countries like
China.

Again, the gunpowder comparison is another straw man
argument. There was no intellectual property protection hundreds of
years ago. To steal and copy technology today with strict laws is a
completely different moral issue. China will have to give up their
entire modern country if you want to talk about abandoning theft.

Funny, did you know 90% or more products in walmart is made in China in fact America itself was first discovered by Chinese traders. But they didn't conquer the land or kill the natives, so your statement that China is a country resorting to physical violence is wrong. They never conquered and invaded other countries, they just traded with them. But the US has been going to other countries and stealing their resources so which country uses physical violence?

@ThinkOfOurKids" We need to stop advertising for a company that comes from a Communist country whose state has a hand in everything that it can control."

funny you should say that...you must be living under a rock or something because you clearly are unaware of the fact that your iphone , android , windows __name your ISP device is a small compact monitoring device that you carry for the government (i.e NSA )so that it can spy on you.

Your nationalistic ideology is blinding you, i suggest you lose those american-freedom-#1-democracy glasses you have on and see the world for what it truly is .

@HazeAndDrizzle@tony11@ThinkOfOurKids and yes, america has that technology, its called a patent and we didn't sell the rights to that. Seriously.... whaa?? Just because you can't see all the updates to everyday items doesn't mean they aren't being innovated everyday. What do you think our R&D, programmers, etc do all day?

@HazeAndDrizzle@tony11@ThinkOfOurKids say whaa? You're a self hating financial guy definitely... walmart invented the value chain, though technically GE came out with vertical integration. I don't think we're better at retail distribution than most other countries. What we have is capitalism and lawful and stringent business atmosphere (most of the countries with better business environments than us are so due to loose practices and bribery) What we have is 7 of the 10 best universities in the world. What we have is the largest number of annual patent registrations. What we have is automation for our manufacturing.

And what we have is soft power. What's popular here is inevitably popular elsewhere. Some of whats popular elsewhere gets here, but we are the most watched country in the world. Everyone else waits for us to make a move so they can't start to react to it.

"Would we be promoting products made from terrorist nations that want America to fail? So what's the difference with China?"

You're implying there's no difference between a privately owned Chinese company and terrorist nations. Please own up to your own words, it's not a strawman argument. I just quoted you.

A "category of people" is not immoral when a category of people is "Chinese". My grandparents are Chinese. Are they immoral? Why? What did they do to you, or anyone, to deserve being immoral besides just existing and being born Chinese?

Chinese are human beings too. They have thoughts, feelings, and compassions for others. Chinese are not "evil". They do not "not care about human life, only money." They are human beings just like you and me. The US aligns itself with all kinds of oppressive nations like Saudi Arabia, Uzbekistan, Pakistan and Egypt, and always has throughout its history.

Replacing America as the sole super power does not mean destroying America. America existed in 1988, survived the Cold War, in fact until 1991 America was never the sole super power in the world. America has existed since 1776. That's why we celebrate Independence Day to commenorate a date in 1776. America's existence is not dependent on being the sole super power.

If you don't care about copying because there was no "intellectual property"? The West invented "intellectual property" and then expects others to abide by it.

The dignity of the Chinese people will not be stopped by you or anyone else. And by the way, there are Chinese who are Americans as well.

A friendly reminder. You
shouldn't make assumptions, because mentioning the facts I said above
and knowing about our government's spy program aren't mutually
exclusive.

I am aware of that, and we should all be upset about
it. So because the NSA does it, you're OK with an even worse and foreign
entity, China, snooping on us? You're OK with an even worse and more
corrupt country dictating how our lives will look like in the future?

"Your nationalistic ideology is blinding you, i suggest you lose
those american-freedom-#1-democracy glasses you have on and see the
world for what it truly is"

You misunderstand me. I'm
not a blind nationalist, because I certainly have no problem if any
other democratic country stood side by side with America on the world's
platform. I just have a problem when it's a country that's out to
destroy us.

Like I said, hypothetically, would you
say the same if I said we shouldn't promote products that companies
from terrorist countries make?

I'm not making a
blanket statement against all foreign countries. I'm just singling out
the one who is an enemy to our country and lifestyle.

I understand where you're coming from though and why you would have said this. There are people out there who are blind nationalists who make blanket statements about any foreign entity.

But we shouldn't let those fools blind us from the fact that sometimes there really are threats out there we need to protect ourselves from, like China. That has nothing to do with open or closed mindedness. It's about sense.

tl;dr: Xiaomi smartphone does hold some potential and might upset the current smartphone industry a bit with its aggressive pricing strategy to deliver the top specs smartphone at the cheapest price possible without compromising build quality. It is a great device, definitely not a cheap knock-out from China but that's all it was, nothing too impressive.

The long version:

If you guys put even a little bit of effort and did some Google search before posting your biased opinion, you would find video and reviews on how good these phones are. Even their recycled package can handle more than 100kg stress without breaking a sweat to ensure the product is well protected when shipping since they don't have a physical store.

I wouldn't go as far as saying the build quality (Mi3 use OEM components such as LCD from Sharp) is better than flagship device from multinational company such as HTX One, Samsung S4/Note3, iPhone 5(s), Nokia Lumia but its definitely a solid device. Just for your info, my opinion was based on real usage experience, not just from reading online review.

As for the viability of Xiaomi business strategy which seems impossible to be sustained over a long period, they had proved it otherwise as they're generating more income over the years because they gain their profit based on their software. Please be reminded Xiaomi is a software company that provides many value added features/services, selling affordable hardware with the top specs was just to enhance their customer user experience.

However, Xiaomi does pose some credibility and legal issues such as closed source kernel, iOS-like interface design (Apple will most likely sue Xiaomi when it reached the U.S market), and providing contents without proper licensing (their own in-house marketplace is full of warez apps and their TV programs are mostly unlicensed) to name a few.

Throughout this whole discussion you've repeatedly made universal generalizations of 1.35 billion people, saying they are "evil", "can't be trusted", "don't care about human life", "only care about money" that Chinese "lie, cheat and steal" as much as they can. Not just in one of your posts but repeatedly, after being pointed out how your words were being construed. What would be the reaction if someone said this about any other racial/ethnic/national group in the world? It is patently offensive no matter what your target is. Do you really expect to say all of this stuff about "Chinese people" and not expect to be called out on it? I don't care that you claim to be or are Chinese American- if you are that just makes the stuff you're saying even more offensive. What you've said is demonstrably false. You're not the only one here who has lived in China. And when you are called out on it you keep saying that people are misconstruing your words, but you keep repeating the same offensive generalizations and then adding new ones, asserting that they're simply "true" based on your experience in China.

There's nothing wrong with saying "many people in China will go to extreme unethical ends to obtain money." But note how easy it is to qualify your words with "many people" when you want to, as opposed to making universal statements like "Chinese only care about money."

I brought up the Cold War because that's an instance where relations between the US and Russia were a lot worse than the US and China today-yet they still managed to live in peace and respect one another.

@ThinkOfOurKids@YourKidsAreStupid 4 years means you started after the financial crisis, everybody has the potential to cheat steal etc their government just doesn't enforce laws very well. No, they don't share our desire for mutual benefit and seek to just be one above all else, but in the past year alone much has changed. The new president seems earnest in wanting to defer short term boom for long term success and due to their expansion into africa and their increased reliance on oil, their interests allign more and more with ours each day. 15 years ago if north korea attacked south korea they might go as far as to help north korea, but today they have more vested interest in south korea.

As far as the regular people, they are no different than post cold war russia or most 2nd world countries today-- the newly rich have overblown egos and an underdeveloped sense of responsibility.

Oh and I don't want to forget about microblogs in the past year. More people are critical of the government, aware of the propaganda, and have stopped being led to hate America everytime the government wants to distract them from something domestically. The new slogan is, screw america whether they are doing good or bad, what are you guys going to do about the issues facing us.

I don't know how old you are or what you do, but you clearly don't know the reality of the China that affects the rest of the world. Again, I'm not characterizing all 1.35 billion people. I'm characterizing the predominant class of people that is intertwined with rest of the world.

I work as a consultant periodically based out of Beijing. I deal with Chinese people on an extremely frequent basis. Have been doing that for the past 4 years, so I have more than anecdotal evidence. Before that I was in Boston dealing with American and European clients.

It's no secret among international corporations that Chinese people are not to be trusted. They lie, cheat, and steal as much as they can. If you're offended by this, then you don't know the real world.

@ThinkOfOurKids@YourKidsAreStupid Your entire premise is false. The fact that you're actually trying to predominately characterize 1.35 billion people as evil and money driven without any real idea of who most of them are and based on nothing but your own anecdotal experience speaks loads of you lack experience actually dealing with people and how out of touch with reality you are.

The funny thing is, I can see how badly you want to differentiate yourself from "other Chinese" but what your doing by focusing all your internet criticism on the Chinese is so typical of the stereotype of the Chinese abroad. In that they'll suck up to everyone but other Chinese who they hate with a passion.

@ThinkOfOurKids Right, so you're basing your entire argument on the assumption that most Chinese are evil, unethical and driven by money. Thats really sound evidence you have there to support your case.

You remind me of those self-hating spineless asian american cowards who try too hard to fit in and "be American" without even realizing that the first step to being respected in America is to be yourself and have pride in who you are. Get lost.

Again you're deliberately misconstruing my words and inserting your own interpretation to make your point. That's a strawman argument. Quoting something means nothing when you don't understand its context.

I never said there's no difference in morality between the two entities. I said that to illustrate the fact that there should be no difference in how the US treats threats.

A category of people is not meant to imply that every single person within that category can be described by a characteristic. It simply means that it is legitimately the predominant description of that category. Otherwise, you're asserting that there exists no such things as categories of people or that all categories of people are the same.

Whether you like it or not, different countries have different predominant characteristics. It doesn't mean every single person in that country molds to that description, but that a majority do.

Here's a newsflash. Human beings can be evil. If you say that Chinese are human, then they can be evil. And just like different countries have different levels of being predominantly characterized as evil, China can be judged on how evil they are.

I'm Chinese American myself (surprise), and since you say you are, both you and I know how much Chinese people are obsessed with money. And I don't mean simply wanting money to be rich, I mean that they worship it. And many people in China will go to extreme unethical ends to obtain money.

Again you're deliberately misconstruing my word. I never said America was the sole super power for its entire history. I'm saying it currently is a superpower, and that against any proper country, a challenge to that status would be normal. But when that challenger is an unethical country like China, it has gone from being normal to being a threat.

It's ironic you bring up the Cold War because there clearly was an enemy to the well being of America at the time, and that is repeating today with China threatening America.

You say that the West invented "intellectual property" and then expects others to abide by it, but you conveniently ignore that China wants to reap the benefits of a Western socioeconomic model. If you want that, you need to abide by Western rules, but China doesn't.

@ThinkOfOurKids@tony11@zero Well, even everything you said were true, what's wrong with China being powerful and strong? Are you assuming that it's okay for every other country to strive to be powerful and strong, but it's not okay for China? What's wrong with you? You have a problem with China?

As I mentioned before most products in walmart are made in China so basically if you bought anything in walmart then you're buying products that are made in China. And so you think Apple and other American companies aren't evil well guess what : http://rt.com/news/apple-report-child-labor-781/

You're deliberately muddling up my words to avoid the reality. Every government in this world instates laws that govern companies. That's an obvious truth that doesn't say anything.

The important concept here is how far a government's reach is with respect to corporations. There is a difference between US laws that affect US corporations and Chinese "laws" or governmental influences that affect Chinese companies.

Given how much power China's central, authoritarian government has, the world can not fully trust any Chinese corporation.

@ThinkOfOurKids@tony11@zero Um, no American company exists without the state's protection, either. The state oversees the basic laws of incorporation in the US, so by definition no US corporation LLC or proprietorship could exist without the US government.